This is referred to as the rationing function of

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Unformatted text preview: ice in the market. Chapter 2 The market system is at work in the bigger picture
here, too. Price in the market rations goods and
services to those who can afford them. 26 Learning Objective 2-3 Slide
27 How will the system
accommodate change?
The market system (and prices) automatically
address this question in that our production
and consumption trends will change as prices
in the marketplace send signals that change is
essential.
For example, when certain goods become too
expensive we seek out substitutes for these
goods and indirectly force producers to alter
their production choices.
Chapter 2 Learning Objective 2-4 27 How will the system accommodate change? The
market system and reactions to prices therein, will
automatically address this question as well. When
prices for certain goods become comparatively too
expensive, consumers will choose alternatives
(substitutes). These choices send signals back to
producers that change is needed.
It is important to keep in mind that some of this change
can...
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